Totally falls within my estimated range. My estimated range of loses was around 1 - 1.2m for this quarter.
What I didn’t fact in was the forward purchasing of raw materials. If you guys taken those forwarding purchase away. You maybe looking at a more rosy report but I am glad KTD/Halo didn’t do this to please the SH. They made a strategic decision for forward purchasing instead. That’s is smart in my book.
Why? Because in times of crisis raw material in essential items normally goes through the roof. Take a look at the cost of masks will give you an idea as to why.
Also with the second factory only went online at the end of the March this is a good report indeed.
Couple things I would like to mention in the report:
”As the COVID-19 crisis unfolded late in the quarter, the Company’s proprietary KeyDairy formulated powdered dairy products experienced an increase in demand approximately four times greater than that prior to the outbreak of COVID-19 and this demand is not reflected in the current quarterly results.”
”Net cash outflow from operating activities decreased to $A2.1 million in the quarter. While the decrease in net cash outflow highlights the initial benefits of scale that are being realised by Keytone and the progression to a position of net cash generation, the level of cash outflow is driven by the scaling up and forward purchasing of raw materials for both new orders and significant follow on orders, as announced in early April 2020 (combined orders totalling $A5.2 million). These orders are for Keytone’s third party private label work and exclude the launch of the new proprietary product ranges which have also contributed to product manufacturing and operating costs for the quarter. Importantly, the corresponding cash receipts for these orders will be received in subsequent quarters;
”By opportunistically forward purchasing raw materials, the Company is improving realised gross margins in the longer term. The increase in raw materials and inventory reflects the fast- growing nature of the business; “
”Other cost drivers in the quarter include additional casual labour costs of c.33% of the net cash outflow as the business continues to scale (ultimately casual labour will reduce as non-recurring casual labour was incurred due to the completion of the integration of the Australian operations and training of new staff as well as new customers being integrated into the day-to- day operations ahead of additional permanent shifts being established), and an increase in marketing costs compared with last quarter as Keytone seeks expansion of its proprietary product range and scaling up costs in New Zealand”
I doubt many people really spending time to read the how and why and only looking at the figures in general.
Good time to enter for none holder and good time to accumulate for existing holders.
Expect big things in the next report!
KTD Price at posting:
39.5¢ Sentiment: Buy Disclosure: Held
